European Unionhttp://www.businessinsider.com/category/european-union
en-usSun, 02 Aug 2015 16:46:32 -0400Sun, 02 Aug 2015 16:46:32 -0400The latest news on European Union from Business Insiderhttp://static3.businessinsider.com/assets/images/bilogo-250x36-wide-rev.pngBusiness Insiderhttp://www.businessinsider.com
http://www.businessinsider.com/r-britain-and-france-urge-eu-wide-action-on-calais-migrant-crisis-2015-8Britain and France are looking for outside help on the migrant crisishttp://www.businessinsider.com/r-britain-and-france-urge-eu-wide-action-on-calais-migrant-crisis-2015-8
Sun, 02 Aug 2015 08:55:00 -0400William James
<p><img style="float:right;" src="/image/55bdf25a5afbd39d678b4567-450-300/britain-and-france-urge-eu-wide-action-on-calais-migrant-crisis-2015-8.jpg" alt="Migrants sit on an embankment near a truck on the road that leads to the Channel tunnel in the hopes of boarding a lorry to make a clandestine crossing to England, in Calais, France, May 22, 2015. REUTERS/Pascal Rossignol
" border="0" /></p><p></p>
<p>LONDON (Reuters) - Britain and France on Sunday urged other European Union states to help them tackle the growing crisis in northern France caused by thousands of migrants seeking to make illegal and dangerous crossings into England.</p>
<p>The French port of Calais has become a focal point for the huge influx of migrants entering Europe to escape poverty and violence in the Middle East and Africa.</p>
<p>Nightly attempts by large groups of the estimated 5,000 migrants in Calais to force their way through the rail tunnel linking France and Britain have provoked public anger and severely disrupted the flow of goods between the two countries.</p>
<p>"There are no easy solutions &ndash; and it is not for the UK and France to solve these problems alone," British interior minister Theresa May and her French counterpart Bernard Cazeneuve said in a joint letter published in the Sunday Telegraph.</p>
<p>"Many of those in Calais and attempting to cross the Channel have made their way there through Italy, Greece or other countries. That is why we are pushing other member states &ndash; and the whole of the EU &ndash; to address this problem at root."</p>
<p>Several people have been killed trying to enter Britain, where they believe they have better prospects of a new life.</p>
<p>The joint plea came as Britain, where the crisis is heaping pressure on Prime Minister David Cameron to take action, detailed some of the extra security measures agreed with French President Francois Hollande on Friday.</p>
<p>Cameron's office said Britain would fund a significant boost in the number of private security guards patrolling the French entrance to the Eurotunnel-operated under-sea rail link. New fences, security cameras and infra-red detectors would also be used to improve security.</p>
<p>French authorities have already increased the number of police in the area.</p>
<p>The official response to the crisis was on Sunday criticized as lacking humanity by Church of England Bishop Trevor Willmott, whose diocese covers the English side of the 30 kilometer (18.64 miles) sea channel separating the countries.</p>
<p>"We've become an increasingly harsh world, and when we become harsh with each other and forget our humanity then we end up in these stand-off positions," Willmott said in an interview with the Observer newspaper.</p>
<p>Britain and France said their efforts were not limited to beefing up security, and that they had led efforts to break up the criminal gangs who seek to profit from the flow of migrants.</p>
<p>"Ultimately, the long-term answer to this problem lies in reducing the number of migrants who are crossing into Europe from Africa," May and Cazeneuve wrote.</p>
<p>"Many see Europe, and particularly Britain, as somewhere that offers the prospect of financial gain. This is not the case &ndash; our streets are not paved with gold."</p><p><a href="http://www.businessinsider.com/r-britain-and-france-urge-eu-wide-action-on-calais-migrant-crisis-2015-8#comments">Join the conversation about this story &#187;</a></p> http://www.businessinsider.com/dont-count-out-the-euro-2015-7Don't count out the eurohttp://www.businessinsider.com/dont-count-out-the-euro-2015-7
Sun, 02 Aug 2015 01:50:00 -0400Peter Schiff
<p><img style="float:right;" src="http://static1.businessinsider.com/image/55bbc217371d22723a8b9991-3112-2334/gettyimages-117089453.jpg" border="0" alt="ECB" data-mce-source="Ralph Orlowski/Getty Images"></p><p>While the world can count dozens of important currencies, when it comes to top line financial and investment discussions, the currency marketplace really comes down to a one-on-one cage match between the two top contenders: the U.S. Dollar and the Euro.</p>
<p>In recent years the contest has become a blowout, with the Dollar pummeling the Euro into apparent submission. Based on the turmoil created by the European Debt Crisis and the continuing problems in Greece and other overly indebted southern tier European economies, many investors may have come to assume that Euro boosters will be forced to ultimately throw in the towel and call off the entire experiment, thereby leaving the Dollar completely unchallenged as the champion currency, now and for the foreseeable future. This is a stunning turnaround for a currency that was seen just a few years ago as a credible threat to supplant the dollar as the world's reserve.</p>
<p>Putting aside the fact that there are many important currency relationships besides the euro/dollar axis, economists, journalists, and investors have forgotten the 16-year history of the Euro and how the currency has survived and prospered after many had assumed it might be consigned to the dustbin of history.</p>
<p>The Euro was created in 1992 by the Maastricht Treaty (which created the European Union) but did not come into being as an accounting unit (not a physical currency) until January of 1999. In the lead up to its launch, many had argued that the Euro would become the heir to the rock solid Deutsche Mark, the German currency that had risen to preeminence on the back of Germany's post war resurgence, high savings rate, enviable trade balance, and post-Soviet unification. With German bankers in a firm leadership position in the European Central Bank and the European Union, many had hoped that the new Euro would adopt the virtues of the Mark. As a result, the Euro debuted with a value of 1.18 dollars. But the honeymoon was short-lived.</p>
<p>Almost immediately from the point it began freely trading the Euro began to encounter severe headwinds. The Russian debt default and the Asian currency crisis in the late 1990's caused investors to sell assets in the emerging markets and seek safe havens in the dominant economies. This provided a crucial early test for the Euro. But the new currency failed to attract much of this fast flowing transnational investment flow. On the other hand, the U.S. markets and the U.S. Dollar were beckoning as extremely attractive targets.</p>
<p>In the second term of Bill Clinton's presidency, America, at least on paper, looked very strong. From 1998-2000, based on Bureau of Economic Analysis (BEA) figures, GDP growth averaged 4.4%, which is roughly four times the rate that we have seen since 2008. The expanding economy and the relative spending restraints that had been made by the Clinton Administration and the newly elected Republican Congress resulted in hundreds of billions of annual U.S. government surpluses, the first such black ink in generations. Many economists comically concluded that the surpluses would become permanent (in fact they lasted just a few years). At the same time, U.S. stock markets were notching some of the biggest gains in their history. From the beginning of 1997 to the end of 1999 the Dow Jones surged by approximately 69%. The tech heavy Nasdaq, the epicenter of the "dot-com" bubble, rallied by an eye popping 294%.</p>
<p><img class="float_left" src="http://static2.businessinsider.com/image/55bbc45d371d2278018bba5e-2667-2000/gettyimages-689386.jpg" border="0" alt="Euro introduction" data-mce-source="Michel Porro/Getty Images" data-mce-caption="People withdraw euros from an ATM after it becomes the official eurozone currency in January 2002.">As a result, international money began pouring into the Dollar, taking the wind out of the sails of the newly launched Euro. The stretched valuations that had pushed up U.S. stocks to nosebleed levels failed to dissuade investors from piling in well into the mid-point of 2000. Not only had Wall Street spread the gospel of the new economy, where negative earnings and high debt no longer mattered, but many were convinced that the interventionist tendencies of the Alan Greenspan-led Federal Reserve would protect investors against losses.&nbsp;</p>
<p>As a result of these forces, the Euro first fell to below parity against the dollar on January 27, 2000 when it closed at 98.9 U.S. cents, a fall of 16% from its debut. After that psychological barrier was breached, the selling intensified. By May 8, 2000 the Euro traded at just 89.5 U.S. cents, an additional 9% decline in just three months. This prompted news stories like <a href="http://news.bbc.co.uk/2/hi/talking_point/debates/specials/732239.stm">a BBC article entitled "Was the Euro a Mistake?"</a> Top economists and investors began wondering if the new currency would last much longer.</p>
<p>The Euro's reputation was further tarnished in September of 2000 when Danish voters rejected their country's plans to adopt the Euro. The distaste shown by a small country widely considered squarely in the mainstream of Western European culture was a huge black eye for the Euro experiment. The pessimism sent the currency down another 6% in just one month following the Danish election, reaching what would become an all-time low of just 82.7 U.S. cents on October 25, 2000. At that level the Euro had fallen a full 30% from its debut valuation. It looked like game over. The Euro vs. Dollar was shaping up to be a <a href="https://www.youtube.com/watch?v=n-wUdetAAlY&amp;feature=youtu.be">Bambi vs. Godzilla scenario</a>.</p>
<p>By the late 1990's gold had been in a bear market that had lasted almost 20 years. As a result, investor sentiment for the metal, which had historically been considered a safe haven asset, was at an all-time low. As a result, many Europeans moved into the dollar to seek shelter instead. At that time gold was trading below Euros 300 per ounce (FRED, FRB St. Louis). Those who had exchanged their Euros for Dollars (when the Euro was 83 cents) would have seen those holdings decline by 50% over the following eight years. On the other hand gold nearly doubled in Euro terms over the same time frame. As this article is being written, gold is now trading at 1,000 Euros per ounce (even after the recent big drop) while the Euro hovers around $1.10. So Europeans who bought and held Dollars continuously when the Euro hit its low in 2000 would be down 25%, but those who bought and held gold instead would have seen those holdings triple. (Past performance does not guarantee future results).</p>
<p>The bursting of the dotcom bubble in mid-2000 finally caused a decisive break with the investment trends that had predominated in the previous number of years (<a href="http://www.europac.com/commentaries/big_picture">see my recent article "The Big Picture"</a>). Just as the dotcom wealth began disappearing, taking the U.S. federal budget surpluses with it, the emerging markets began to recover, and the much-maligned Euro started getting some attention.</p>
<p>By January 5, 2001 the Euro had hit 95.4 cents, a stunning 15.3% rally in just over two months. And although the Euro zigzagged substantially over the next year and a half (with an early retreat in 2002, causing the Organization for Economic Cooperation and Development (OECD) to wonder <a href="http://www.dailymail.co.uk/news/article-95384/Euro-doomed-weak-currency.html">whether the Euro was a "Doomed Currency"</a>), by the second half of 2002 the uptrend was firmly in place, with the Euro reaching parity again with the Dollar by July 15, 2002, 30 months after it had fallen below that level. By April 22, 2008 the Euro traded at $1.60 to the Dollar, a price that represented a 36% increase over its debut level and a stunning 93% rally from its October 2000 low.</p>
<p>But when the Financial Crisis of 2008 reached full flower in August, September, and October of 2008, investors once again panicked as they had eight years before. In seeking a safe haven, they once again chose the U.S. Dollar (perhaps motivated by the low valuations then assigned to the greenback). As funds began flowing out of the Euro and into the Dollar, the Euro dropped rapidly. By the end of October the Euro only fetched $1.26, a 21% drop from its April high. But when the markets stabilized in 2009 so did the Euro. It essentially traded sideways against the Dollar over the next two years, reaching back to $1.46 by June 6, 2011.</p>
<p><img src="http://static3.businessinsider.com/image/55bbbf1e371d2210008bbb41-1200-605/eurochart1.jpg" border="0" alt="EuroChart1" data-mce-source="Euro Pacific Capital, data from St. Louis Fed"></p>
<p>When the European debt crisis really started grabbing headlines in 2011, with yields on sovereign debt of the so-called PIIGS nations (Portugal, Italy, Ireland, Greece, and Spain) widening to record territory in comparison to the sovereign bonds of Germany, scrutiny of the Euro came into question once again. The uncertainty over possible bailouts for European banks that were holding potentially toxic government debt was too much uncertainty for the market to handle. The pressure on the Euro was intensified by the slowing Eurozone economy. These forces combined helped to push the Euro down steadily during 2012 and 2013.</p>
<p>But the straw that really broke the camel's back came at the end of 2014 when it became clear that the European Central Bank, under the new leadership of Mario Draghi, would finally succeed in short-circuiting the anti-bailout restrictions of the Maastricht Treaty and outflank the objections of the German financial and political establishment in order to bring full blown Quantitative Easing (QE) to the Eurozone. The QE program essentially involves creating Euros out of thin air in order to buy government debt and hold down long-term interest rates.</p>
<p>Expectations about European QE came at a time when most observers concluded that the U.S. economy was finally on track for a strong recovery in 2015 and that the Federal Reserve (which has already showered the United States with almost six full years of QE) had finally done away with the program and would begin raising rates for the first time in almost 10 years. Despite a languishing economy, the U.S. markets had once again delivered stellar returns, with the S&amp;P 500 rising 64% between 2011 and 2014, doing so without ever experiencing a correction of more than 10%.</p>
<p>These movements provided a strong rationale for investors to sell Euros and buy Dollars. In the 12 months from May 2014 to May 2015 the Euro fell by about 20%. When it bottomed out at $1.05 on March 11, 2015, the Euro had fallen 34% from its peak seven years earlier. This revived the opinions that the Euro was dead and that the Dollar would be the only real reserve currency for the foreseeable future.</p>
<p>But what if the assumptions about a U.S. economic recovery and Fed rate hikes were wrong? Could observers be mistaken now about the trajectory of the Dollar vs. the Euro as they were back in 2000? While some had warned that the dotcom bubble of 2000 could end badly, very few understood how deeply the mania was the root of the economic expansion and how severely the final flame-out would threaten the entire economy. Similarly, very few had foreseen the dangers that the housing and mortgage bubble had presented to the wider economy in 2008. The economic and market contractions in 2000 and 2008 might have been much worse if the Fed had not been able to cut interest rates by almost 500 basis points in the face of the crises. (No such options are available if the economy contracts today). In other words, complacency can be very dangerous, especially if there is no ammunition to combat a crisis if it arrives unexpectedly.</p>
<p>Confidence is the only thing that really undergirds modern fiat currencies. But confidence can be very ephemeral...disappearing as quickly as it arrives. The U.S. Dollar benefits from confidence that the Euro currency may just be unworkable, that the U.S. economy will continue to improve, and that the Fed will raise rates throughout the remainder of 2015 and into 2016. If these expectations are unfulfilled, there could be a Euro reversal.</p>
<p>When a trend remains in place for a while, people tend to think it will continue forever. When it reverses, the shock can be widespread. Just as currency speculators over-estimated the strength of the U.S. economy in 2000, I believe they are making the same mistake again today. But the U.S. economy is actually much weaker and more vulnerable now than it was in 2000. If the spell of confidence surrounding the Dollar is broken, it may also reverse the fortunes of other beaten down currencies. This could present a sea change in the global investment landscape for which wise investors should be prepared.</p><p><a href="http://www.businessinsider.com/dont-count-out-the-euro-2015-7#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/clear-out-iphone-storage-space-2015-6">How to clear out a ton of space on your iPhone superfast</a></p> http://www.businessinsider.com/google-opposes-cnil-order-right-to-be-forgotten-worldwide-french-regulator-2015-7Google is fighting back against an attempt to make the 'right to be forgotten' apply worldwide (GOOG)http://www.businessinsider.com/google-opposes-cnil-order-right-to-be-forgotten-worldwide-french-regulator-2015-7
Fri, 31 Jul 2015 04:34:40 -0400Rob Price
<p><img style="float:right;" src="http://static6.businessinsider.com/image/55bb2e26dd0895791f8b4593-1213-910/eric schmidt-1.jpg" alt="eric schmidt" data-mce-source="Jessica Rinaldi/Reuters" /></p><p>Google is fighting back against an attempt by a French regulator to make it apply the divisive&nbsp;"right to be forgotten" worldwide.</p>
<p>The American search giant is refusing to recognise French privacy watchdog&nbsp;<span>Commission Nationale de l'Informatique et des Libert&eacute;s'</span>&nbsp;(CNIL) "global authority" <a href="http://www.politico.eu/article/google-challenges-global-right-to-be-forgotten-order/">and has formally requested that it withdraw its order, Politico reports</a> &mdash; potentially opening the door to fines for non-compliance.</p>
<p>The right to be forgotten is the principle that people should be able to appeal to search engines to have information about them that is outdated or irrelevant removed from search listings &mdash; even if the information is factually accurate.</p>
<p>It was implemented in Europe following a ruling by a Spanish court in May 2014, and its introduction has pitted privacy activists against freedom of speech advocates. The former say that it is necessary so that people's pasts do not hang over them forever, while the latter argue that it restricts internet users' free access to information.</p>
<p>Google strongly opposes to the right to be forgotten, but it implemented the ruling on European versions of the Google website anyway. This means European citizens can now send in requests to the search giant and, if approved, the web pages identified will be removed from search results. (The web pages themselves are not removed.) Google has approved around 1 million requests since its introduction.</p>
<p>However, it is only implemented on European domains, like Google.co.uk and Google.fr &mdash; visitors to Google.com and other global versions of the site will see the full, uncensored results. This has angered CNIL. <a href="http://uk.businessinsider.com/france-google-right-to-be-forgotten-global-implement-cnil-2015-6">It wants Google to implement the right to be forgotten worldwide</a>, arguing that "in order to be effective, delisting must be carried out on all extensions of the search engine."</p>
<p>In practice, this would mean that if a French resident successfully appealed to have a URL delisted, it would be removed from search results across the globe &mdash; not just in countries where European courts have any jurisdiction.</p>
<p>When CNIL gave the initial order, <a href="http://uk.businessinsider.com/france-google-right-to-be-forgotten-global-implement-cnil-2015-6">a Google spokesperson told Business Insider that</a> the company has "been working hard to strike the right balance in implementing the European Court&rsquo;s ruling, co-operating closely with data protection authorities. The ruling focused on services directed to European users, and that's the approach we are taking in complying with it."</p>
<p>It has now hardened its stance, <a href="http://googlepolicyeurope.blogspot.co.uk/2015/07/implementing-european-not-global-right.html">with global privacy counsel Peter Fleischer arguing&nbsp;in a blogpost on Thursday that CNIL's order</a> "a troubling development that risks serious chilling effects on the web." He explains:</p>
<p class="p1" style="padding-left: 30px;">While the right to be forgotten may now be the law in Europe, it is not the law globally. Moreover, there are innumerable examples around the world where content that is declared illegal under the laws of one country, would be deemed legal in others: Thailand criminalizes some speech that is critical of its King, Turkey criminalizes some speech that is critical of Ataturk, and Russia outlaws some speech that is deemed to be &ldquo;gay propaganda."</p>
<p class="p1" style="padding-left: 30px;">If the CNIL&rsquo;s proposed approach were to be embraced as the standard for Internet regulation, we would find ourselves in a race to the bottom. In the end, the Internet would only be as free as the world&rsquo;s least free place.</p>
<p>As such, Google is setting itself up for a confrontation with the regulator. "We believe that no one country should have the authority to control what content someone in a second country can access," Fleischer writes. "As a matter of principle, therefore, we respectfully disagree with the CNIL&rsquo;s assertion of global authority on this issue and we have asked the CNIL to withdraw its Formal Notice."</p>
<p>What happens next?&nbsp;<a href="http://www.politico.eu/article/google-challenges-global-right-to-be-forgotten-order/">Politico reports that CNIL says it will respond within two months to Google's argument</a> &mdash; and that the organisation has the power to fine Google for non-compliance.</p>
<p>Whatever the outcome, it is another strain on the California company's already-fractured relationship with Europe. It dominates the market on the continent even more so than it does in the US &mdash; 91% (desktop) search share versus 77% in the US &mdash; and has become the subject of considerable&nbsp;ire from authorities. Issues include accusations of tax avoidance, antitrust allegations, and previous clashes with Spanish regulators over linking to news sites.</p>
<p><img style="float:right;" src="http://static3.businessinsider.com/image/55bb2e26dd0895791f8b4594-1200-900/screen shot 2014-08-08 at 11.47.26 am.jpg" alt="matt brittin google europe boss" data-mce-source="Twitter/Matt Brittin" />At the start of June, Google's new European boss Matt Brittin &mdash; appointed in February &mdash; <a href="http://uk.businessinsider.com/google-europe-chief-matt-brittin-admits-company-screwed-up-europe-anti-trust-2015-6">gave his first public interview</a>. He admitted that Google had made mistakes in the past, and said that "as far as Europe is concerned: We get it. We understand that people here are not the same in their attitudes to everything as people in America." Brittin identified a failure of communication as part of the reason relationships have deteriorated: "We just didn't have the people on the ground to be able to have some of those conversations as we grew."</p><p><a href="http://www.businessinsider.com/google-opposes-cnil-order-right-to-be-forgotten-worldwide-french-regulator-2015-7#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/singing-computer-martin-backes-whitney-houston-ballads-2015-7">There’s a computer that perpetually sings 90’s ballads and it’s weirdly perfect</a></p> http://www.businessinsider.com/europe-trying-to-hide-giant-pile-of-debt-2015-7Europe is trying to hide a giant pile of debthttp://www.businessinsider.com/europe-trying-to-hide-giant-pile-of-debt-2015-7
Fri, 24 Jul 2015 01:36:00 -0400Harry S. Dent Jr.
<p><img style="float:right;" src="http://static3.businessinsider.com/image/55b0e0872acae7cc3f8b6b13-2627-1970/2006 sweeping it under the rug.jpg" alt="Banksy Sweeping It Under the Rug" data-mce-source="Dave Etheridge-Barnes / Getty Images" /></p><p>It&rsquo;s kind of like selling goods to consumers with very bad credit and then being surprised when they don&rsquo;t pay.</p>
<p>But before I get into that, we all know Greece owes Germany, the ECB, and the IMF a lot of money.</p>
<p>Last week I explained that if they went the &ldquo;Grexit&rdquo; route, 75% of Greece&rsquo;s government debt would&rsquo;ve been wiped clean. That&rsquo;s $90 billion to Germany alone and about $250 billion to the rest of the euro zone. It would have hurt, but there&rsquo;s no avoiding pain at this point, and now it&rsquo;s only going to be worse.</p>
<p>But there is another level of debt almost no one is talking about.</p>
<p>In fact, we have a harder time getting good information on it because the EU has increasingly hidden it.</p>
<p>However, this debt gets at the heart of why Germany and some of the strongest opponents to a Grexit were so desperate to keep Greece in the euro zone.</p>
<p>This not-much-talked-about debt are the TARGET2 loans Greece (and other euro zone importers) owes the rest of them.</p>
<p>It&rsquo;s a fancy way of saying &ldquo;past due accounts receivables.&rdquo; Another way of saying this: &ldquo;The check&rsquo;s in the mail.&rdquo; Or: &ldquo;We&rsquo;ll pay you when we can.&rdquo;</p>
<p>Fat chance.</p>
<p>The idea is that when German or other euro zone companies sell goods to Greek companies, the Greek companies hand off their payment obligations to the Greece central bank. That central bank then owes Germany&rsquo;s central bank, which then pays the German companies who sold the goods in the first place.</p>
<p>The problem is that the southern European countries &ndash; PIIGS, or Portugal, Italy, Greece, and Spain plus Ireland &ndash; import a ton. When Germany sells to Greece, Greece&rsquo;s central banks collects the money, but doesn&rsquo;t pay the German central banks. These are called TARGET2 loans.</p>
<p>They&rsquo;re not really &ldquo;loans&rdquo; in the sense that they are involuntary. The German central bank knows that if it pushes too hard for these payments on time, exports will slow or discontinue without such credit extension. It&rsquo;s either extend credit to these subprime borrowers or lose the sales!</p>
<p>It&rsquo;s such a huge issue because these economically weaker nations aren&rsquo;t competitive exporters. They can&rsquo;t afford these outrageous trade deficits they&rsquo;re wracking up! They have run increasing trade deficits ever since the euro was created. The currency lets them borrow at a cheaper rate. And the stronger exporting countries are willing to extend credit to keep their gravy train going.</p>
<p>Under this backwards arrangement, Greece owes Germany 100 billion euros, or roughly $109 billion. The broader euro zone &ndash; almost totally the PIIGS &ndash; owes it <strong>531 billion</strong>. That&rsquo;s almost $580 billion.</p>
<p>This is the most contentious example, but the Netherlands, Luxembourg and Finland are extending credit to these weaker central banks too &ndash; though nowhere near the extent of Germany, which holds around 75% of these TARGET2 loans.</p>
<p>The following chart shows the TARGET2 balances across the euro zone. Blue is the extended credit from the four major net exporters. Red is what the five net importers owe them.</p>
<p><img src="http://static3.businessinsider.com/image/55b0df01371d2212008b8df4-1194-895/screen shot 2015-07-23 at 8.31.42 am.png" alt="eurozone credit" data-mce-source="Economy &amp; Markets" /></p>
<p>Before I even get into this, just take the chart at face value. Look at all that credit. It&rsquo;s disgusting. We didn&rsquo;t have this kind of foolishness prior to 2008. Now we live in an age where credit is king. <em>Real value</em> is supposed to be king. Cash is supposed to be king. <u>Not</u> credit. This nonsense has got to stop.</p>
<p>The edge of this graph shows the current balance for all TARGET2 loans: 709 billion euros ($774 billion). It actually peaked at 1.06 TRILLION euros in late 2012. Come on!</p>
<p>This gets at why Germany wasn&rsquo;t in a hurry to let Greece leave the euro zone. And in fact, why it finally insisted they stay.</p>
<div class="d4c31_ad_item d4c31_custom_ad">
<div class="d4c31_stars"></div>
</div>
<p>In government debt, Greece owes Germany 90 billion euros.</p>
<p>If Greece had exited, Germany would have had to write-off that amount <em>overtime</em>. The short-term affects for Germany would have been manageable.</p>
<p>But in addition to the government debt, Greece owes Germany another 100 billion in TARGET 2 loans. That would&rsquo;ve been written off immediately. That&rsquo;s much more painful and embarrassing to voters near term &ndash; which is the realm politicians live in.</p>
<p>That means Germany could see 190 billion euros &ndash; or $200 billion &ndash; in default if Greece exited. That&rsquo;s much more than any other country by far.</p>
<p>To put this in more perspective, Germany&rsquo;s GDP is about 2.9 trillion euros. 46% of that, or 1.3 trillion euros, is from exports. About 63% of that, or around 840 billion, goes to the euro zone. Exports are paramount to its aging economy that would otherwise already be slowing dramatically longer term!</p>
<p>That means the 531 billion in TARGET2 balances from the euro zone equals <u>63% of its exports</u>, which means the payments are eight months late.</p>
<p>Any accountant worth his salt would lose his mind if account receivables were just <em>three </em>months late!</p>
<p>This is one of Europe&rsquo;s dirtiest secrets.</p>
<p>To keep exports going to countries that can&rsquo;t afford it, the central banks of the exporting nations have to extend high credit to the central banks of the weaker importing nations.</p>
<p>That way the stronger countries import more than they frankly should and the weaker nations live well beyond their means. This is the very imbalance that the euro has created since its inception in 1999.</p>
<p>Talk about denial.</p>
<p>Talk about not addressing the underlying problem.</p>
<p>Talk about kicking the can down the road!</p>
<p>This system won&rsquo;t last. The euro won&rsquo;t last. Watch out below in the months and years ahead when it finally cracks, or at best is restructured into a strong and weak version of the currency.</p>
<p>As bad as things will get in the U.S., there&rsquo;s one bright spot: Thank god we&rsquo;re not Europe. We will still be the best house in a <strong>very</strong> bad neighborhood ahead.</p><p><a href="http://www.businessinsider.com/europe-trying-to-hide-giant-pile-of-debt-2015-7#comments">Join the conversation about this story &#187;</a></p> http://www.businessinsider.com/another-russian-neighbor-with-occupied-territories-is-moving-toward-the-eu-2015-7Another Russian neighbor with occupied territories is moving toward the EUhttp://www.businessinsider.com/another-russian-neighbor-with-occupied-territories-is-moving-toward-the-eu-2015-7
Thu, 23 Jul 2015 23:00:00 -0400
<p><span class="firstLetter"><img style="float:right;" src="http://static4.businessinsider.com/image/55afff59371d22a10e8b8ad0-4187-2885/rtx1cgn2.jpg" alt="Georgia's Defence Minister Tina Khidasheli attends an official opening ceremony of the joint U.S.-Georgian exercise Noble Partner 2015 at the Vaziani training area outside Tbilisi, Georgia, May 11, 2015" data-mce-source="Reuters" data-mce-caption="Georgia's Defence Minister Tina Khidasheli attends an official opening ceremony of the joint U.S.-Georgian exercise Noble Partner 2015 at the Vaziani training area outside Tbilisi, Georgia, May 11, 2015" />G</span>eorgian Defense Minister Tina Khidasheli says her country is successfully "conducting a diplomatic war" with Russia, but can only reach Tbilisi's "ultimate goal &mdash;&nbsp;the restoration of its territorial integrity" by completing the country's integration with the EU.</p>
<p>Khidasheli told RFE/RL in an exclusive interview on July 22 that while "Russia is losing all of its bridgeheads" in diplomatic circles, "Georgia is gaining new friends."</p>
<p>She said Georgia will continue to "move gradually towards European integration, and no provocation can stop or slow this process."</p>
<p>Khidasheli also said "no one has any illusions about Russia," and that "no one in the world today thinks of Russia as a partner."</p>
<p>Accusing Russian military forces of "occupation" in Georgia's breakaway regions of South Ossetia and Abkhazia, Khidasheli said Tbilisi expected that "Russian soldiers themselves" will restore the borders of Georgia to their 1992 positions after the country's integration into the "European family."</p>
<p>Russian troops have remained in South Ossetia and Abkhazia, backing the self-proclaimed governments there, since the Russian-Georgian war in August 2008.</p><p><strong>SEE ALSO:&nbsp;<a href="http://www.businessinsider.com/the-us-is-practicing-military-drills-in-russias-backyard-2015-5#ixzz3gkbXXlbs" >The US is practicing military drills in Russia's backyard</a></strong></p>
<p><a href="http://www.businessinsider.com/another-russian-neighbor-with-occupied-territories-is-moving-toward-the-eu-2015-7#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/wwii-anniversary-parade-russian-military-vehicles-moscow-2015-5">Russia reveals new high-tech weapon vehicles in a rehearsal for the country's biggest military parade</a></p> http://www.businessinsider.com/stratfor-world-predictions-security-politics-international-2015-7Chilling predictions for what the world will look like in a decadehttp://www.businessinsider.com/stratfor-world-predictions-security-politics-international-2015-7
Wed, 22 Jul 2015 09:29:00 -0400Lamar Salter
<div><div>
<script src="https://apis.google.com/js/platform.js"></script><div class="g-ytsubscribe" data-channel="BusinessInsider" data-layout="full" data-count="default"></div>
</div></div>
<p class="embed-spacer"></p>
<p>Global intelligence firm Stratfor has published a new report featuring some chilling predictions for what the world will look like in the next 10 years. </p>
<p>Check out what possible fates await some of the most powerful countries in the world.</p>
<p><em>Produced by <a href="http://www.businessinsider.com/author/lamar-salter" target="_blank">Lamar Salter</a>. Original reporting by <a href="http://www.businessinsider.com/author/armin-rosen">Armin Rosen</a>.<a href="http://www.businessinsider.com/author/jacquelyn-smith"><br></a></em></p>
<p><strong>Follow BI Video:</strong> <a href="https://www.facebook.com/BusinessInsider.Video">On Facebook</a></p>
<p> </p>
<p><em> </em></p>
<p><em> </em></p><p><a href="http://www.businessinsider.com/stratfor-world-predictions-security-politics-international-2015-7#comments">Join the conversation about this story &#187;</a></p> http://www.businessinsider.com/r-in-greek-crisis-one-big-unhappy-eu-family-2015-7Greece's debt crisis has exposed growing rifts in the euro zonehttp://www.businessinsider.com/r-in-greek-crisis-one-big-unhappy-eu-family-2015-7
Sun, 19 Jul 2015 07:36:00 -0400Paul Taylor
<p><img style="float:right;" src="http://static1.businessinsider.com/image/55ab5c8a5afbd3f04e8b4568-450-300/in-greek-crisis-one-big-unhappy-eu-family-2015-7.jpg" alt="Greek Prime Minister Alexis Tsipras arrives for a parliamentary session in Athens, Greece July 16, 2015. REUTERS/Alkis Konstantinidis" border="0" /></p><p>BRUSSELS (Reuters) - The latest paroxysm of Greece's debt crisis has exposed growing rifts in the euro zone which, unless addressed soon, could lead to the break-up of European monetary union, the EU's most ambitious project.</p>
<p>The most worrying sign for European leaders is that public opinion and domestic politics are pulling them increasingly in opposing directions &mdash; not just between Greece and Germany, the biggest debtor and the biggest creditor, but almost everywhere.</p>
<p>Germans, Finns, Dutch, Balts and Slovaks no longer want taxpayers' money to go to bail out Greeks, while the French, Italians and Greeks feel the euro zone is all about austerity and punishment and lacks solidarity and economic stimulus.</p>
<p>With central and east European states growing more assertive and the Dutch and Finns facing mounting domestic constraints, a compromise between euro zone leaders Germany and France, increasingly hard to find over Greece, is no longer sufficient to settle the problems.</p>
<p>There are so many stakeholders with divergent views that crisis management is becoming ever more difficult. A far-reaching reform of the 19-nation currency area's flawed structure seems a remote prospect.</p>
<p>After weeks of late-night emergency meetings of leaders and finance ministers, culminating in a tense all-night summit, the euro zone produced a fragile deal to keep Greece afloat by making it a virtual protectorate under intrusive supervision.</p>
<p>Few, if any, of the main protagonists think it will work.</p>
<p>Greek Prime Minister Alexis Tsipras said it was a bad deal that would make life worse for Greece but he had swallowed it because the alternative was worse. German Finance Minister Wolfgang Schaeuble said Athens would have done better to leave the euro zone &mdash; "temporarily" &mdash; to get a debt write-off.</p>
<p>Chancellor Angela Merkel, Europe's dominant leader, made clear the main virtue of the deal was to avoid something worse.</p>
<p>"The alternative to this agreement would not be a 'time-out' from the euro ... but rather predictable chaos," she said.</p>
<p><img src="http://static2.businessinsider.com/image/5594833169beddcb5f8670c5-3370-2029/rtx1ildp.jpg" alt="Angela Merkel" data-mce-source="REUTERS/Fabrizio Bensch" data-mce-caption="German Chancellor Angela Merkel speaks with Finance Minister Wolfgang Schaeuble during a parliamentary debate on the Greek debt crisis at the German lower house of parliament Bundestag in Berlin, Germany, July 1, 2015. " /></p>
<p>A senior EU official involved in brokering the compromise, who spoke on condition of anonymity, said there was now a "20, maybe 30 percent chance of success".</p>
<p>"When I look at the next two to three years, the next three months, I see only black clouds," the official said. "All we succeeded in doing was to avoid a chaotic Grexit."</p>
<p>Problems are likely to resurface in late August or September when it comes to concluding the detailed negotiations on a three-year bailout program. By then Greece's economy may have gone further off the rails and Greeks may be heading for early elections.</p>
<p>The International Monetary Fund is due to make another analysis of Greek debt before a deal is concluded which may well show that only a "haircut", or outright write-down of loans, can make it sustainable.</p>
<p>Schaeuble, who says a "haircut" is illegal in the euro zone, will be waiting with his Plan B for debt relief with Greece outside the currency area.</p>
<p>Even if the third Greek bailout in five years does not trip up at that stage, the chances of it being fully implemented and delivering an economic recovery look slim.</p>
<p>The Greek crisis has also widened divisions between euro and non-euro members, with Britain and the Czech Republic insisting on guarantees for their taxpayers' money in exchange for using an EU-wide bailout fund for bridge finance.</p>
<p>If the Greek crisis were the euro zone's only worry, it might be easier to isolate and resolve it, since financial markets have shown little sign of the contagion to other weak sovereigns' bonds that threatened to tear it apart in 2012.</p>
<p><img src="http://static6.businessinsider.com/image/5494237feab8eaa12746e3c3-3334-2116/rtr4im8p.jpg" alt="jean claude juncker" data-mce-source="Francois Lenoir/Reuters" data-mce-caption="European Commission President Jean-Claude Juncker addresses a news conference following a European Union leaders summit in Brussels December 18, 2014." /></p>
<p>Greece has been such a distraction that leaders barely noted an important report authored by European Commission President Jean-Claude Juncker with the heads of four other EU institutions on how to make the monetary union work better.</p>
<p>That is arguably the biggest challenge facing the EU, yet there is little sign of willingness to contemplate pooling more fiscal sovereignty or sharing more common liabilities as the authors say is required.</p>
<p>The debt crisis that began in 2010 led to the creation of some new institutions to strengthen the currency area &mdash; a permanent bailout fund, stricter enforcement of fiscal rules, a single banking supervisor and a joint mechanism for winding down failed banks.</p>
<p>But German-led opposition to mutualising debt, French-led resistance to yielding more control over national budgets and the electoral rise of Eurosceptic populist parties prevented the euro area going further.</p>
<p>In Brussels, there is much talk of how the latest Greek crisis should prompt a leap forward in integration to strengthen the euro zone, but it's not clear what progress is possible.</p>
<p>Among the quick wins suggested by the "five presidents' report" is a common deposit insurance scheme for euro zone banks that are under ECB supervision and a fiscal backstop for a bank resolution fund being raised from the finance sector.</p>
<p>Whether such ideas will fly in Berlin remains to be seen. In the longer term, after 2017, the report envisages setting up a euro area treasury accountable at the European level.</p>
<p>French President Francois Hollande suggested this month creating a parliament for the euro zone to give decisions greater democratic legitimacy.</p>
<p>Such ambitious visions stand at odds with frantic nocturnal crisis management and the increasingly divisive nationalist tone of much of the debate in the euro area.&nbsp;</p>
<p>(Writing by Paul Taylor, editing by Richard Mably)</p><p><a href="http://www.businessinsider.com/r-in-greek-crisis-one-big-unhappy-eu-family-2015-7#comments">Join the conversation about this story &#187;</a></p> http://www.businessinsider.com/greek-debt-deal-power-europe-2015-7What the Greek debt deal shows about power in Europehttp://www.businessinsider.com/greek-debt-deal-power-europe-2015-7
Tue, 14 Jul 2015 08:24:00 -0400David Ignatius
<p><img style="float:right;" src="http://static5.businessinsider.com/image/559b7565eab8eac25e449bf2-1200-800/merkel-54.jpg" border="0" alt="merkel"></p><p>When the financial details are stripped away, the Greek bailout deal reached early Monday morning is really a reassertion of the core idea of post-war Europe — which is that France and Germany will stick together.</p>
<p>The bailout terms are complicated, and they reflect compromises that will anger hard-liners both in Greece, who will see the deal as a <em>diktat</em> by creditors, and in Northern Europe, where many will see it as a capitulation to profligate debtors in Athens.</p>
<p>But the north-south debate misses the essential alignment, which is Paris-Berlin. During the bailout crisis, Europe walked to the brink&nbsp;—&nbsp;not just in terms of a weak Greece exiting the euro zone, but of a strong Germany decoupling from its partners. With Monday's deal, the core of Europe reaffirmed its partnership, regardless of what happens in the small peripheral country of Greece.</p>
<p>The agreement must be endorsed this week by the parliaments in Greece and Germany, the two countries that were locked in public confrontation. That's a good thing, for it will give the agreement the kind of public affirmation that has been too rare in modern Europe. The Greek legislature will have to sign off Wednesday on fundamental reforms of public pension, financial accounting and tax collection. The German Bundestag will have to endorse rescuing a country that, in the eyes of many Germans, has been wasteful, corrupt and perhaps worst of all, ungrateful.</p>
<p>"This was an inflection point for the euro zone," said Peter Wittig, Germany's ambassador to Washington, in an interview Monday afternoon. He argued that while Greeks may complain that the deal is being imposed on them, it represents a German reaffirmation of solidarity with Greece&nbsp;—&nbsp;and with the larger idea of an unified Europe that the euro represents.</p>
<p>The Greek bailout negotiations have often seemed a bizarre exercise in financial bluster. The left-wing government of Prime Minister Alexis Tsipras imagined that a small, bankrupt Greece had leverage over a powerful, prospering Germany. That illusion came crashing down in the aftermath of the Greek referendum a week ago. A defiant Greek public said "no" to Europe's terms, only to find that Germany and many other members of the euro zone appeared willing to let them stumble toward a "Grexit," as it came to be known.</p>
<p><img src="http://static5.businessinsider.com/image/5593f28cdd0895c8248b4652-1200-800/gettyimages-478990122.jpg" border="0" alt="Demonstrators during a rally in Athens, Greece, 29 June 2015. Greek voters will decide in a referendum next Sunday on whether their government should accept an economic reform package put forth by Greece's creditor. Greece has imposed capital controls with the banks being closed untill the referendum. (Photo by )">The Greeks had hoped that their European partners could be intimidated into making financial concessions by fear of the financial contagion that might follow a Greek bankruptcy and exit from the common currency. But it turned out that the deeper concern for Germany and its partners was what might be called "concessions contagion"&nbsp;—&nbsp;the prospect that if the euro zone caved to Tsipras, other weak indebted countries that had made reforms&nbsp;—&nbsp;such as Spain, Portugal, Ireland and Cyprus&nbsp;—&nbsp;would feel they had been suckered. The only way to avoid this form of contagion was to take a hard line with Greece.</p>
<p>The terms of the $90 billion-plus bailout package will be negotiated only after the Greek parliament commits to the kind of reforms that other debtor nations have made. Then, promise the European leaders, the spigot will open&nbsp;—&nbsp;and Greece will finally get the sort of debt restructuring and investment it needs.</p>
<p>A statement issued Monday in Brussels after the euro zone summit said that "nominal haircuts on the debt cannot be undertaken." But the previous paragraph effectively says the opposite: "The Eurogroup stands ready to consider, if necessary, possible additional measures (possible longer grace and payment periods) aiming at ensuring that gross financing needs remain at a sustainable level."</p>
<p>Germany also appears to have conceded, at last, that austerity by itself won't produce economic growth. The bailout plan calls for a 50 billion euro trust fund (financed by sale of Greek government assets) that can be used for investments, as well as a 35 billion Euro commitment to growth and investment spending, plus a still-vague pledge of 300 billion euros for long term public and private investment. The promise, implicitly, is that on the other side of pain lies hope for an eventual restoration of prosperity.</p>
<p><img src="http://static6.businessinsider.com/image/5511482c69bedd5066d07f72-1200-750/rtr4ujhz.jpg" border="0" alt="German Angela Merkel Greek Prime Minister Alexis Tsipras">The moment of truth in the Greek crisis came when German Chancellor Angela Merkel indicated that she might prefer a Grexit to more concessions to an insolvent Greece. The Germans even floated a paper calling for a "temporary" suspension of Greece's membership in the euro. This put Merkel on a collision course with French President François Hollande, who had insisted that Europe (and its currency) must stay together in the crisis, even if that meant extending new assistance to Greece.</p>
<p>The subtext in this discussion, for months, has been whether a strong Germany will remain anchored with its weaker partners. It's easy to forget that the euro emerged in the aftermath of German reunification in 1989&nbsp;—&nbsp;a moment that frightened France and many other nations that were scarred by two wars with a big, powerful German state. The euro represented a promise by Germany that its future was embedded with its European partners, to the point that were agreeing to give up their beloved Deutschmark in favor of a common currency.</p>
<p>French-German reconciliation and solidarity gave birth to modern Europe, and this was the hidden but decisive factor in the Greek bailout negotiations. The key to compromise in the marathon, 17-hour talks that led to Monday's deal was the decision of Merkel and Hollande to stand together. The rest was fine print.</p><p><a href="http://www.businessinsider.com/greek-debt-deal-power-europe-2015-7#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/facts-about-greek-economy-bailout-euro-crisis-2015-6">6 mind-blowing facts about Greece's economy</a></p> http://www.businessinsider.com/greek-bank-capital-controls-remain-two-more-months-2015-7Greek bank capital controls will remain in place for at least two more monthshttp://www.businessinsider.com/greek-bank-capital-controls-remain-two-more-months-2015-7
Sat, 11 Jul 2015 15:51:00 -0400Reuters
<p class="p1"><img style="float:right;" src="http://static3.businessinsider.com/image/559eae5569beddc00e679461-1200-800/rtr3774f.jpg" border="0" alt="greece greek bank vandalized"></p><p></p>
<p class="p1">The capital controls imposed on Greece's banks will remain in place for at least another two months, Economy Minister George Stathakis said on Saturday, as eurozone finance ministers met in Brussels to discuss a request by Athens for a new bailout.</p>
<p class="p1">Stathakis told Greece's Mega TV that the banks could reopen as soon as next week, if an agreement with creditors is reached this weekend. But other restrictions on withdrawals and currency exports would remain in place for most.</p>
<p class="p1">"That will stay in play for two months or some months," he said.</p>
<p class="p1">(Reporting by Costas Pitas; editing by James Mackenzie)</p><p><a href="http://www.businessinsider.com/greek-bank-capital-controls-remain-two-more-months-2015-7#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/facts-about-greek-economy-bailout-euro-crisis-2015-6">6 mind-blowing facts about Greece's economy</a></p> http://www.businessinsider.com/why-the-greek-referendum-was-a-ruse-2015-7Why the Greek referendum was a rusehttp://www.businessinsider.com/why-the-greek-referendum-was-a-ruse-2015-7
Thu, 09 Jul 2015 10:57:25 -0400Carlo Bastasin
<p><img style="float:right;" src="http://static3.businessinsider.com/image/55964a73dd08955a508b4647-1200-858/rtx1ihk5.jpg" border="0" alt="The word 'Yes' in Greek is seen on a sticker as pro-Euro demonstrators attend a rally in front of the parliament building, in Athens, Greece, June 30, 2015. Greece's conservative opposition warned on Tuesday that Sunday's vote over international bailout terms would be a referendum over the country's future in Europe, and that wages and pensions would be threatened if people were to reject the package. "></p><p>The Greek referendum can be interpreted as either the genesis of a nationalist political contagion that will destroy the European dream, or as a ruse of history to revive the common project. It is the responsibility of European leaders to realize its potential.</p>
<p>The Greek “No” came only two weeks after the presidents of the European institutions published a lifeless report on the future of the monetary union. Now that we have plunged into terra incognita, the document seems anachronistic, predicting that little will change in the euro area over the next few years. Only existing economic policy instruments will be used.</p>
<p>In this shortsighted vision, reviving growth, employment, and investment pertains only to structural reforms, which each country should conduct by itself. Seven years of crisis show that this diminutive strategy is not at all sufficient for the governing of a complex and heterogeneous economy.</p>
<p>Each of us can judge Prime Minister Alexis Tsipras’ gambit in our own fashion. But everyone probably understands that the opinion of a people, so starkly expressed, is never irrelevant. It is a response to a question that implicitly lingers not only in Greece, but everywhere: Is the management of the euro area, as it currently stands, consistent with the consensus of its citizens?</p>
<p><img src="http://static3.businessinsider.com/image/559bb54feab8eae16609635b-1200-800/greek speak_mill.jpg" border="0" alt="Greece">A “Yes” vote would have justified the “nothing new” approach endorsed by the document of the European presidents. The “No” instead calls for a much more ambitious answer. Despite the chaos that it is causing, Europe must grasp the institutional opportunity offered by this pronouncement of the people before the temptation of nationalism extends to other countries.</p>
<h2>Three key steps</h2>
<p>The first step is to immediately reopen negotiations with Athens. This does not mean giving up on negotiating principles. Rather, it would show respect for the involvement of citizens and lend credibility when we foreshadow an eventual political union.</p>
<p>In addition, sitting at the negotiating table gives the European Central Bank an excuse to sustain the Greek banking system until a deal is possible, avoiding humanitarian consequences to its citizens.</p>
<p>Those who fear Tsipras’ moral hazard know little of the serious situation Greece is in due to this reckless showdown. The country will remain reliant on partners for many years. By sacrificing former Finance Minister Yanis Varoufakis (à la&nbsp;Iphigenia), Tsipras has finally opened the door to pragmatic language.</p>
<p><img src="http://static1.businessinsider.com/image/5592a2d0ecad048e7f169e90-1200-858/rtx1i32m.jpg" border="0" alt="tsipras" style="color: #000000;">EU leaders must also abandon hostile rhetoric, which engendered a “to each his own”&nbsp;attitude. In fact, Tsipras’ political victory engages him more than before in fulfilling his part of the contract. He has no more excuses: He can and must change his country, bring its institutions to a European level, and finally make politics fair and effective.</p>
<p>The second step for European leaders is to recognize that, since its inception, the European crisis has been a crisis of national policies. National governments have not understood the challenge of the euro and have held back European integration.</p>
<p>Only a year ago, Greek gross domestic product was growing at a rate of almost 2 percent. In 2015, it was expected to grow by 3 percent. The Antonis Samaras government, taking advantage of the recovery, suspended reforms and allowed the deficit to grow​. Syriza won the next election. Hostile to cooperation with the European institutions, it made the future of the country so uncertain that it plunged the economy into a deep recession and liquidity crisis.</p>
<p>Before the euro, currency devaluations allowed leaders like Samaras and Tsipras to conceal opportunistic or hostile moves. Now, such behaviors have become incompatible with the euro.</p>
<p>The purpose of the single currency was to induce governments to be consistent with economies challenged by the difficult global environment.&nbsp;According to my estimates, based on CompNet data, countries which had neglected the global challenge since 2000—thus losing their positions in the value chains—are the same countries that later required financial assistance.</p>
<p><img src="http://static1.businessinsider.com/image/556e9c2edd0895b0548b4618-1200-924/rtx1a02k.jpg" border="0" alt="European Commission President Jean Claude Juncker Greece Greek Prime Minister Alexis Tsipras">The third step is to admit that politics are not just about being competitive. Each time we make a political choice, we consider what we think is right and what is not.</p>
<p>In their vote, the Greeks reacted to the injustices caused by the crisis in their country. Europeans would rather consider Greek governments as unreliable, untrustworthy, and tolerant of cronyism, oligarchies, and ineffectiveness. These are two different ways to pursue the same goal: more just political conduct. But they are by no means incompatible.</p>
<p>The Greek problems originate in weak institutions—like in Italy—and European involvement could be useful for resolving them. Tsipras must prove that he shares the fundamentals of European civilization and involve European institutions in the joint endeavor to change his country. He cannot ask for financial aid without institutional control.</p>
<h2>Before they all say “No”</h2>
<p>As for European leaders, an equal dose of humility is required. Grexit would be a dramatic blow to the European project. Once possible, the option of leaving the euro would establish a financial hierarchy between strong and weak countries, one even more unbalanced than now.</p>
<p><img src="http://static2.businessinsider.com/image/559c572f69bedd1357d32635-1200-800/rtx1j9f1.jpg" border="0" alt="greek greece flag euro">Weak states would fall back into the spiral of sovereign debt and banking debt that has crippled their economies. The hierarchy, already conspicuous in the years of the euro spread, would become a permanent power structure. One after the other, the troubled countries would see nationalist opposition to European “subordination” grow out of control.</p>
<p>There is therefore a crucial final step: to recognize that the European institutional weakness must be resolved in parallel with that of Greece. The euro area is not an arena for the survival of the fittest, but a complementary economic space in which different economies can benefit from their interdependence.</p>
<p>Let’s open the debate on political union in the euro area, not behind closed doors in the Federal Chancellery or the Elysée, and not with documents made to buy time, but with the involvement of citizens in a project that affects them, before they all say “No.”</p><p><a href="http://www.businessinsider.com/why-the-greek-referendum-was-a-ruse-2015-7#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/acidity-levels-rising-oceans-climate-change-effects-2015-7">If you're not freaking out about the ocean, you should be</a></p> http://www.businessinsider.com/greece-is-a-reminder-that-the-european-union-was-a-terrible-idea-to-begin-with-2015-7Greece is a reminder that the European Union was a terrible idea to begin withhttp://www.businessinsider.com/greece-is-a-reminder-that-the-european-union-was-a-terrible-idea-to-begin-with-2015-7
Thu, 09 Jul 2015 07:23:00 -0400George Will
<p><img style="float:right;" src="http://static2.businessinsider.com/image/559c572f69bedd1357d32635-1200-800/rtx1j9f1.jpg" border="0" alt="greek greece flag euro"></p><p>When Prime Minister Alexis Tsipras decided to call a referendum on a bailout offer from Greece's creditors — an offer that expired before Sunday's referendum — he informed the Greek nation in a televised speech. At 1 a.m.</p>
<p>Mediterranean lifestyles are different. Greece's chosen style of living is dependent on others' choices.</p>
<p>Tsipras is a peculiar phenomenon, a defiant mendicant. He urged voters to do what they did.</p>
<p>In voting "no," they asserted that Greece's dignity is incompatible with loans that come with conditions attached. Tsipras's Syriza Party insists, however, that dignity is compatible with perpetual dependency on the forbearance and productivity of others.</p>
<p>Karl Marx, an intellectual for whom labor as most 19th-century people experienced it was only a rumor, detested the division of labor because it "alienated" workers. But although Syriza partakes of the European left's unending romance with Marxism, its program requires a particular division of labor: Greece will live better than its economic productivity can sustain, and more productive Europeans will pay the difference. Until socialism arrives, Marx said, "the worker . . . is only himself when he does not work," a sentiment many Greeks embrace by retiring on government pensions at age 50.</p>
<p>Left-wing parties in other southern European countries — Portugal, Spain, Italy — are watching to see if Greece can turn weakness, indeed prostration, into strength: Continue to rescue us or we will collapse into a contagious mess. Actually, the risk of economic contagion is slight: Greece's economy is about the size of Louisiana's, and is 2&nbsp;percent of the euro zone's, and markets have discounted a Greek default. The real danger is a political contagion — a flight from free-market reforms elsewhere.</p>
<p><img src="http://static6.businessinsider.com/image/5511482c69bedd5066d07f72-1200-750/rtr4ujhz.jpg" border="0" alt="German Angela Merkel Greek Prime Minister Alexis Tsipras">It is said that the European Union is a splendid idea but that the euro — the common currency — is a bad idea. Actually, the euro is a bad idea that is the logical application of an even worse idea — the European Union.</p>
<p>By the middle of the 20th century, after the Somme and the Holocaust, Europeans were terrified of themselves. This propelled the movement toward European unity, yet another of Europe's misbegotten enthusiasms.</p>
<p>One from which Margaret Thatcher, a daughter of the "Mother of Parliaments," quickly recoiled. In 1988, she said: "We have not successfully rolled back the frontiers of the state in Britain, only to see them reimposed at a European level with a European super-state exercising a new dominance from Brussels." In the general election campaign earlier this year, Prime Minister David Cameron promised a referendum on British membership in the E.U. It will be more important than this year's parliamentary elections because it will determine whether future parliamentary elections will matter.</p>
<p><img src="http://static1.businessinsider.com/image/559c5d6469beddd677d32633-1200-858/rtx1gvxj.jpg" border="0" alt="Alexis Tsipras">The E.U. <em>exists</em> to require nations to "pool" their sovereignties in unelected, unaccountable bureaucracies. The retrograde <em>point</em> of the E.U. is to leech from national parliaments powers that were hard-won over many centuries of struggle. National governments rendered unserious by the E.U. are apt to regress to adolescence, as with Syriza's referendum — a tantrum masquerading as governance.</p>
<p>Seventy years after the guns fell silent, the drive to turn "Europe" from a geographic into a political expression lacks the excuse of preventing continental convulsions caused by nationalistic militarisms.</p>
<p><img style="float:right;" src="http://static1.businessinsider.com/image/5380a2ccecad04bd3443afc0-1200-2000/languages.jpg" border="0" alt="EU languages parliament">Now, the drive for "ever closer union" — which means ever-more attenuated democracy — is fueled by the traditional socialist (and, in the United States, the progressive) goal of expanding the reach of a mandarin class of supposed experts in social rationality.</p>
<p>Today, the European Parliament has 24 official languages, and the fate of "Europe" is said to be linked to the future of ramshackle Greece.</p>
<p>There, on Sunday night, people poured into Athens's Syntagma Square to celebrate having told the creditors to send more money with fewer strings attached.</p>
<p>Many celebrants came to the square by subway, which did not charge riders because capital controls, a consequence of five years of negotiations with creditors and evasions of reality, had made currency scarce.</p>
<p>On Sept. 30, 1938, when French Prime Minister Édouard Daladier's plane bringing him back from the Munich conference was landing in Paris, he feared that the crowd gathered at the airport would be furious because of the concessions that had been made to Hitler.</p>
<p>When Daladier saw that the crowd was cheering, he reportedly said: "The bloody fools."</p>
<p>After the 61&nbsp;percent "no" vote was announced in Sunday's referendum, there was dancing in the streets of Athens.<img class="nc_pixel" src="https://pixel.newscred.com/px.gif?key=YXJ0aWNsZT1hYWE2YjVjODk4NWQ0ZTYwOTE4OWEzNjNkMWI4MjRjNiZwdWJsaXNoZXI9NzMwZWI4NmFiNTlmMGQ0MTkyNmFjNjViMDFmODNlMmY=" border="0" alt="" width="1" height="1" style="line-height: 1.5em;"></p><p><a href="http://www.businessinsider.com/greece-is-a-reminder-that-the-european-union-was-a-terrible-idea-to-begin-with-2015-7#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/qualities-bad-leader-micromanagement-complaining-2015-6">4 things a leader should never do</a></p> http://www.businessinsider.com/greece-political-situation-2015-7Greece and all of Europe are in uncharted watershttp://www.businessinsider.com/greece-political-situation-2015-7
Tue, 07 Jul 2015 16:51:00 -0400Stelios Papadopolous
<p><em><img style="float:right;" src="http://static4.businessinsider.com/image/559bcd8d6bb3f7e063fc8f87-1200-924/alex-tsipras-angela-merkel.jpg" border="0" alt="alex tsipras angela merkel">Greece has voted “No” to its international creditors’ bailout proposal, supporting the left-wing Syriza Government in a high-stakes referendum.</em></p>
<p>The Sunday poll, in which Greece voted “No” to its international creditors’ bailout proposal, showed a clear rejection of creditor terms: 61% voted&nbsp;“No,” and just under 39% voted&nbsp;“Yes.” What this result will mean politically, however, is a rather more open question.</p>
<p>One reason has to do with the main actors of the German elite who seem to have presented a conflicted and confused response to the result. For instance, the German Vice Chancellor Sigmar Gabriel<a href="http://www.tagesspiegel.de/politik/griechenland-nach-dem-referendum-sigmar-gabriel-tsipras-hat-die-letzten-bruecken-eingerissen/12014360.html">&nbsp;told the Tagesspiegel newspaper</a>&nbsp;that “the Greek Government is leading the Greeks on a path of bitter sacrifice and hopelessness.” Yet Germany’s hardline finance minister, Wolfgang Schaeuble, stated&nbsp;<a href="http://www.reuters.com/article/2015/07/04/eurozone-greece-idUSL8N0ZK06620150704">rather surprisingly</a>&nbsp;that Greece could exit the eurozone “temporarily.”</p>
<p>Similar cautious remarks were also reiterated by the German foreign minister Frank Walter Steinmeier, who&nbsp;<a href="http://www.tagesspiegel.de/politik/aussenminister-frank-walter-steinmeier-im-interview-signal-eines-grexit-waere-verheerend/12010486.html">stated in Tagesspiegel am Sonntag</a>&nbsp;that a Grexit would be a “disastrous signal to countries outside the European Union.”</p>
<p>Angela Merkel on her part made no public statements, yet her awareness of the negative geopolitical consequences of a Grexit is well-known.</p>
<p>The Chancellor is also aware of the fact that a Grexit will end the dream that eurozone membership is irrevocable. But again, how Germany’s leadership especially Angela Merkel will respond is still a puzzle, despite the Chancellor’s track record on managing the passing of unpopular legislation. This last point is especially relevant in case Greece requires a new bailout.</p>
<p>But there is another reason behind the uncertainty. If Greece exits the euro, it will most likely be what the Economist Intelligence Unit calls a&nbsp;<a href="http://country.eiu.com/article.aspx?articleid=983305282&amp;Country=Greece&amp;topic=Politics">“de facto” exit</a>&nbsp;as opposed to a de jure exit. A de facto exit means that a “No” vote would increase the likelihood of Greece defaulting on the ECB on July 20th.</p>
<p>Greece would then be cut off from the ECB’s ELA program, default on private creditors, and issue a parallel currency which will circulate alongside the euro. With an increasing need to print domestic scrip, Greece will have exited the monetary union, at least in de facto terms.</p>
<p>Such a scenario can be reversed, since it is up to the Greek government to set a conversion rate between the euro and the scrip and re-denominate contracts. Consequently, whether Greece will be in or out of the euro will be an open question.</p>
<p>Yet the uncertainty does not end here. Even if a de facto exit occurs, Greece would continue to be legally (de jure) a member of EMU, and may face significant uncertainty over its status. This is due to the fact that the nation could use treaty provisions to argue that it was illegally forced out of the euro by its peers, while its peers could accuse Greece of violating treaty provisions by issuing a parallel currency.</p>
<p>Consequently, the legal debate will be protracted and its outcome will be highly uncertain, to say the least.</p>
<p>In conclusion, if there is one concept that sums up the road ahead for Greece and Europe it is that of uncertainty. The latter is even more true due to the current polarized nature of Greek politics. Such polarization will embolden the radical voices within Syriza&nbsp;to harden their stance towards Tsipras, and by consequence his stance towards the creditors.</p><p><a href="http://www.businessinsider.com/greece-political-situation-2015-7#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/facts-about-greek-economy-bailout-euro-crisis-2015-6">6 mind-blowing facts about Greece's economy</a></p> http://www.businessinsider.com/the-european-union-is-dying-right-before-our-eyes-2015-7The European Union is dying right before our eyeshttp://www.businessinsider.com/the-european-union-is-dying-right-before-our-eyes-2015-7
Mon, 06 Jul 2015 08:24:00 -0400Nigel Farage
<h2><img style="float:right;" src="http://static2.businessinsider.com/image/559a71dfecad04314d4b5c4e-1200-924/flag-burning-3.jpg" border="0" alt="Flag burning">It's not just disaffected pensioners: young Greeks have worked out that they don't need the bloated EU</h2>
<ul>
<li><a href="http://www.telegraph.co.uk/finance/economics/11719974/Greek-referendum-no-vote-Grexit-crisis-live.html"><em>Follow our live coverage</em></a></li>
</ul>
<p>Despite the scaremongering and bullying from those in Brussels, we are waking today with <a href="http://www.telegraph.co.uk/news/worldnews/europe/greece/11719317/What-happens-next-after-the-No-vote-in-the-Greece-referendum.html">Greece having delivered a resounding No</a> .</p>
<p>That comes despite EU bosses saying that it would mean a <a href="http://www.telegraph.co.uk/finance/economics/11684495/Grexit-the-truth-is-it-would-help-Britain-no-end.html">Greek exit from the Euro</a>, not to mention the heavy economic pressure placed on the Greek people to go along with the wishes of Brussels. It is a crushing defeat for those Eurocrats who believe that you can simply bulldoze public opinion.</p>
<p>Chief bully-boy Martin Schulz, President of the European Parliament, and other supposed leaders of the European Union did their best to <a href="http://www.telegraph.co.uk/finance/economics/11718296/EU-warns-of-Armageddon-if-Greek-voters-reject-terms.html">terrify the Greek people into submitting to the wishes of the European Union</a> . But they utterly failed. The fear espoused by the Yes campaign was rejected. Opinion polls that put the Yes side ahead just days before were way out, as thousands upon thousands of Greek citizens lined the streets chanting “Oxi”.</p>
<p><a href="http://www.telegraph.co.uk/news/worldnews/europe/greece/11719317/What-happens-next-after-the-No-vote-in-the-Greece-referendum.html">Where does Greece go from here</a> ? Well it seems to me that Alexis Tsipras cannot go on having his cake and eating it. A more prosperous Greece, ran by the Greeks rather than by the EU must surely face up to the reality that a euro exit is both inevitable and desirable in order for a long-term economic recovery to truly begin.</p>
<p>There is a bigger picture to consider, however. A huge generational dynamic exists, running through all of this. One poll from Antenna News in Greece found that 67 per cent of Greeks under the age of 35 voted No which shows just how much the seismic plates are shifting within European politics. The fact that young Greeks overwhelmingly rejected the Brussels dictat and voted No in huge numbers is of massive significance.</p>
<p>Whilst some of the older generation may still buy into the notion of the EU having brought peace to Europe, the younger generations are just not sold. And why should they be? The European Union today is causing massive resentment between European nations. Just look at how relations between Germany and Greece have deteriorated. Far from bringing peace, the EU now sows resentment.</p>
<p>Whatever fine aims there were fifty or sixty years ago have no relevance to the reality of life for young people right across the EU now, including in Greece. The EU’s old, outdated ideas have been rejected at the ballot box in exchange for a new approach and fresh thinking.</p>
<p><em>• <a href="http://www.telegraph.co.uk/news/worldnews/europe/greece/11720081/Greece-votes-No-The-European-Union-is-dying-before-our-eyes.html">Nigel Farage: The EU is dying before our eyes</a></em></p>
<p>The result is a tired, stumbling European Union that is dying on its feet before our very eyes. Credibility for the project is fading fast as citizens right across Europe awaken to the reality of its authoritarian instincts that seek to run roughshod over public opinion.</p>
<p>With younger generations now turning against the EU project, we can see support for the EU's dream of a United States of Europe fading fast. An outdated European Union has been found out and rejected emphatically by young Greeks in the 21st century.</p>
<p>It is all too clear to see why: both the euro single currency and the European Union itself have done great harm to the prospects of young people who are now realising that we do not need a single currency or a political union to be friends, neighbours and trading partners. Far more important than this European Union is the concept of national democracy, of which this Greek referendum and its result are a beaming example of.</p>
<p>&nbsp;</p>
<p>This article was written by Nigel Farage from The Daily Telegraph and was legally licensed through the NewsCred publisher network.</p>
<p><img class="nc_pixel" src="https://pixel.newscred.com/px.gif?key=YXJ0aWNsZT05ZGUxZjJlZmEzYmUyOWEzNmU3NzhhODJiNmY1YTRhOSZwdWJsaXNoZXI9NzMwZWI4NmFiNTlmMGQ0MTkyNmFjNjViMDFmODNlMmY=" border="0" alt="" width="1" height="1"></p><p><a href="http://www.businessinsider.com/the-european-union-is-dying-right-before-our-eyes-2015-7#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/how-much-sex-should-happy-relationship-rachel-sussman-2015-5">How much sex you should be having in a healthy relationship </a></p> http://www.businessinsider.com/the-betting-odds-suggest-britain-is-more-likely-to-leave-the-european-union-than-greece-2015-7The betting odds suggest Britain is more likely to leave the European Union than Greecehttp://www.businessinsider.com/the-betting-odds-suggest-britain-is-more-likely-to-leave-the-european-union-than-greece-2015-7
Mon, 06 Jul 2015 07:42:00 -0400Guy Faulconbridge
<p><img style="float:right;" src="http://static6.businessinsider.com/image/559a692eecad04682c4b5c43-818-613/vegas-betting-1.jpg" border="0" alt="vegas betting"></p><p>LONDON (Reuters) - Greece will not leave the euro zone this year but Britain is now more likely to vote to leave the European Union in a referendum, Ladbrokes bookmaker odds showed on Monday after Greeks voted 'no' to bailout terms.</p>
<p>Greece is now 2/5 to remain in the euro zone this year while the odds on Britain leaving were cut to 3/1 from 7/2, the bookmaker said.</p>
<p>"Betting markets favor their euro zone membership staying intact until the end of the year at least," Ladbrokes spokesman Alex Donohue said of Greece.</p>
<p>"Looking at longer term implications of the result, there's been a marked increased in British political punters backing a Brexit this morning."</p>
<p>Greece's outspoken finance minister resigned on Monday, removing a major obstacle to any last-minute deal to keep Athens in the euro zone after Greeks voted resoundingly to reject the austerity terms of a bailout.</p><p><a href="http://www.businessinsider.com/the-betting-odds-suggest-britain-is-more-likely-to-leave-the-european-union-than-greece-2015-7#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/new-air-force-one-tour-boeing-private-jet-2015-5">Take a tour of the $367 million jet that will soon be called Air Force One</a></p> http://www.businessinsider.com/eus-juncker-a-no-vote-would-weaken-greeces-negotiating-position-2015-7EU's Juncker: A 'no' vote would weaken Greece's negotiating position http://www.businessinsider.com/eus-juncker-a-no-vote-would-weaken-greeces-negotiating-position-2015-7
Fri, 03 Jul 2015 07:48:19 -0400Michele Sinner and Adrian Croft
<p><img style="float:right;" src="http://static2.businessinsider.com/image/55967639ecad04747dc39fdf-1200-924/luxembourg-prime-minister-jean-claude-juncker-3.jpg" border="0" alt="Luxembourg Prime Minister Jean-Claude Juncker"></p><p>LUXEMBOURG (Reuters) - A 'no' vote in Sunday's referendum would dramatically weaken Greece's position in debt negotiations, European Commission President Jean-Claude Juncker said on Friday, declining to say whether creditors would re-open negotiations in that case.</p>
<p>"If the Greeks will vote 'no', the Greek position is dramatically weakened," Juncker told a news conference launching Luxembourg's six-month presidency of the European Union.</p>
<p>"The program has come to an end, there are no negotiations under way, if the Greeks will vote no, they have done everything but strengthening the Greek negotiation position," he added.</p>
<p>"Even in the case of a 'yes' vote, we'll have to face difficult negotiations," Juncker said.</p>
<p>Luxembourg Prime Minister Xavier Bettel said the EU needed to build bridges with Greece and with Britain, which plans a referendum on EU membership.<span style="line-height: 1.5em;">&nbsp;</span></p>
<p>(Reporting by Michele Sinner, writing by Adrian Croft; editing by Foo Yun Chee; editing by Robert-Jan Bartunek)</p><p><a href="http://www.businessinsider.com/eus-juncker-a-no-vote-would-weaken-greeces-negotiating-position-2015-7#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/new-air-force-one-tour-boeing-private-jet-2015-5">Take a tour of the $367 million jet that will soon be called Air Force One</a></p> http://www.businessinsider.com/ryanair-petition-frances-striking-air-traffic-controllers-europe-2015-7Ryanair is waging war on France's air traffic controllershttp://www.businessinsider.com/ryanair-petition-frances-striking-air-traffic-controllers-europe-2015-7
Wed, 01 Jul 2015 05:20:43 -0400Oscar Williams-Grut
<p><img style="float:right;" src="http://static3.businessinsider.com/image/5593b10add089581408b4640-1695-1271/rtr3kl44.jpg" alt="Ryanair Chief Executive Officer Michael O'Leary reacts during a news conference in Madrid April 9, 2014." border="0" data-mce-source="REUTERS/Susana Vera" data-mce-caption="Ryanair Chief Executive Officer Michael O'Leary." /></p><p>Ryanair is calling for a crackdown on France's air traffic controllers and it wants the public to help it out.</p>
<p>The budget Irish airline <a href="http://www.investegate.co.uk/ryanair-holdings-plc--rya-/rns/ryanair-petition-to--keep-europe-s-skies-open-/201507010700317921R/">has launched an online petition</a> calling for the European Commission to crackdown on the number of strikes French air traffic controllers (ATCs) declare.</p>
<p><span class="ai">Since 2009, French ATC unions have staged 39 days of strike action, according to Ryanair, which caused "cancellations for millions of people across Europe."</span></p>
<p>The most recent strike on April 12 and 13 caused 3,600 flight cancellations. There are more strikes planned this week on Thursday, Friday, and Saturday.</p>
<p>Ryanair's Kenny Jacobs <a href="http://www.investegate.co.uk/ryanair-holdings-plc--rya-/rns/ryanair-petition-to--keep-europe-s-skies-open-/201507010700317921R/">says in a statement</a>: "<span>It's unacceptable that Europe's consumers repeatedly have their holiday and travel plans disrupted or cancelled by the selfish actions of ATC unions every summer, who use strikes as a first weapon rather than a last resort. </span></p>
<p><span>"French ATC unions will again stage three further days of strikes this week, which will impact hundreds of thousands of European consumers. It is particularly reprehensible that these strikes are taking place at the height of the peak summer season, deliberately targeting holiday makers and families."</span></p>
<p><span>Ryanair wants Europe to ban air traffic controllers from striking, in the same way police and military are forbidden, or to let other European air traffic controllers to step in and cover for the French during periods of industrial action.</span></p>
<p><span>Ryanair plans to deliver its petition, dubbed "Keep Europe's skies open," to Brussels once it hits 1 million signatures. It's not clear how many signatures it currently has. <a href="http://www.keepeuropeskiesopen.com/">You can sign the petition here</a>.</span></p><p><a href="http://www.businessinsider.com/ryanair-petition-frances-striking-air-traffic-controllers-europe-2015-7#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/avoid-long-lines-airport-tsa-2015-5">How to skip long lines at the airport — just like the 1%</a></p> http://www.businessinsider.com/charts-eu-economy-is-bigger-than-the-us-2015-6Europe is bigger than the UShttp://www.businessinsider.com/charts-eu-economy-is-bigger-than-the-us-2015-6
Tue, 30 Jun 2015 12:51:00 -0400Bob Bryan
<p>As a single country, the US is the biggest economy in the world.</p>
<p>But given its close ties, you could easily argue that the countries of the European Union make for one big economy. Indeed, you would be arguing that it's the world's largest economy.</p>
<p>With <a href="http://www.businessinsider.com/report-greece-wont-pay-the-imf-on-tuesday-2015-6">Greece's probable default</a> worrying European markets, maintain economic calm on the continent is even more important than many people realize. Joseph P. Quinlan, chief market strategist for&nbsp;US Trust, made this fact abundantly clear in a note that laid out just how important the EU's economy is to the world.</p>
<p><img src="http://static1.businessinsider.com/image/5592e2236da811de0e37e6bb-1200-900/cotd-eu-us-china-india-gdp-ppp.png" alt="cotd eu us china india gdp ppp" border="0"></p>
<p>The adjusted GDP of the 28 EU member nations is bigger than both China and the US, the traditional list of world's economic super powers.</p>
<p>"In nominal U.S. dollar terms, the European Union (plus Norway, Switzerland, Iceland) accounted for 25.4% of world output in 2014 according to data from the International Monetary Fund.&nbsp;&nbsp;That was greater than America’s share (22.5%) and well in excess of China’s—13.4%," said Quinlan.&nbsp;</p>
<p>The EU consumer is also on top.</p>
<p><img src="http://static3.businessinsider.com/image/5592b9bcecad047866169e92-1200-750/household consumption expenditure us v eu.jpg" alt="household consumption expenditure us v eu" border="0"></p>
<p>The EU, plus periphery nations, accounted for 28.5% of all consumer spending in 2014, according to Quinlan, above both the 26.6% spent by US consumers and the 15.6% spent by the emerging economies of the Brazil, Russia, India and China combined. This attracts global companies to the region.</p>
<p>"Gaining access to wealthy consumers is among the primary reasons that US companies venture overseas, and hence the continued attraction of Europe to US firms," wrote Quinlan.</p>
<p>So while Greece has <a href="http://www.businessinsider.com/little-impact-on-us-economy-from-greece-2015-6">little direct impact on the US</a>, stabilizing the massive EU economy should still be a huge concern for Americans and the rest of the world.&nbsp;</p><p><a href="http://www.businessinsider.com/charts-eu-economy-is-bigger-than-the-us-2015-6#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/401k-james-altucher-retire-scam-investing-taxes-2015-6">James Altucher defends his outrageous claim that you shouldn't invest in your 401(k)</a></p> http://www.businessinsider.com/eus-tusk-there-is-no-chance-of-a-bailout-for-greece-this-time-2015-6EU's Tusk: There is no chance of a bailout for Greece this timehttp://www.businessinsider.com/eus-tusk-there-is-no-chance-of-a-bailout-for-greece-this-time-2015-6
Mon, 29 Jun 2015 19:03:28 -0400Alastair Macdonald
<p><img style="float:right;" src="http://static1.businessinsider.com/image/5591cde369bedd0417f3a45c-1200-924/polish-prime-minister-donald-tusk-3.jpg" border="0" alt="Polish Prime Minister Donald Tusk"></p><p>BRUSSELS (Reuters) - European Council President Donald Tusk told Greek Prime Minister Alexis Tsipras on Monday that he saw no willingness among member states to agree to Tsipras's request to an extension to bailout loans.</p>
<p>"After consultations with the leaders, in the absence of new elements, I see no willingness to go against the positions expressed by finance ministers at their June 27 meeting," Tusk said in a letter seen by Reuters that was sent in reply to request from Tsipras for a one-month extension of credits.</p>
<p>The letter reflected a closing of ranks by EU leaders after Tsipras called a referendum on the creditors' offer of cash for reforms and urging Greeks to reject it next Sunday.</p>
<p>Tusk said that a process for negotiations was agreed at a euro zone summit he had called last Monday and reaffirmed at an EU summit on Thursday and Friday.</p>
<p>"Unfortunately," Tusk wrote, "Your government broke off programme negotiations."</p>
<p>He said that following the expiry on Tuesday, June 30, of the bailout programme, Greece could apply for new assistance.</p>
<p>"In Europe, the door for negotiations always remains open in a spirit of solidarity and responsibility," Tusk said.</p>
<p>(Reporting by Alastair Macdonald; Editing by Angus MacSwan)</p><p><a href="http://www.businessinsider.com/eus-tusk-there-is-no-chance-of-a-bailout-for-greece-this-time-2015-6#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/prevent-blisters-jogging-running-shoes-sneakers-athletic-shoelace-hole-2015-5">Someone figured out the purpose of the extra shoelace hole on your running shoes — and it will blow your mind</a></p> http://www.businessinsider.com/french-court-rules-against-basic-tenant-of-the-eu-2015-6French court rules against basic tenet of the EUhttp://www.businessinsider.com/french-court-rules-against-basic-tenant-of-the-eu-2015-6
Mon, 29 Jun 2015 16:40:00 -0400Barbara Tasch
<p><img style="float:right;" src="http://static3.businessinsider.com/image/5581dab0eab8eae272d7989e-1200-924/rtx1gdu7.jpg" border="0" alt="A group of migrants gather on the seawall at the Saint Ludovic border crossing on the Mediterranean Sea between Vintimille, Italy and Menton, France, June 13, 2015."></p><p>France will continue border controls on migrants at the Italian frontier after a French court ruled they don't violate <a href="http://europa.eu/legislation_summaries/justice_freedom_security/free_movement_of_persons_asylum_immigration/l33020_en.htm">an agreement</a> that guarantees free movement among 26 European countries,&nbsp;<a href="http://www.france24.com/en/20150629-top-french-court-approves-border-controls-with-italy?ns_campaign=reseaux_sociaux&amp;ns_source=twitter&amp;ns_mchannel=social&amp;ns_linkname=editorial&amp;aef_campaign_ref=partage_aef&amp;aef_campaign_date=2015-06-29&amp;dlvrit=66745">France24 reports</a><span style="line-height: 1.5em;">.</span></p>
<p>France's top administrative court dismissed a complaint by three organizations in support of the hundreds of refugees stranded at the Franco-Italian border, most of whom come from Africa.&nbsp;</p>
<p>The Schengen agreement, which France signed in 1985, ensured no border controls between all European signatory states and was defined as such:&nbsp;<span style="line-height: 1.5em;">"The Schengen area represents a </span><a href="http://europa.eu/legislation_summaries/justice_freedom_security/free_movement_of_persons_asylum_immigration/l33020_en.htm">territory where the free movement of persons is guaranteed</a><span style="line-height: 1.5em;">. The signatory states to the agreement have abolished all internal borders in lieu of a single external border."</span></p>
<p>The French court does not consider that the agreement applies here, however.</p>
<p><span>"The suppression of systematic interior border controls in the Schengen area does not prevent French authorities from carrying out identity controls," it said in a statement.&nbsp;</span></p>
<p><img src="http://static3.businessinsider.com/image/559198faecad0419025a0a63-1200-800/rtx1hs5g.jpg" border="0" alt="Migrants rest after disembarking in the Sicilian harbour of Augusta, Italy, June 23, 2015. ">The statement also said those controls did not equate to implementing a permanent and systematic control at the border and would therefore continue.&nbsp;</p>
<p>France has been stopping the mostly African migrants from entering into its territory since dozens of them have been camped out near the Italian border post at Ventimiglia.&nbsp;</p>
<p>The situation has created tensions between the two countries and illustrates how the huge migrant crisis is affecting Europe. <a href="http://www.bbc.com/news/world-europe-24583286">Over 105,000 migrants have entered the EU</a>&nbsp;since the beginning of the year, 55,000 of them through Italy.</p>
<p><span style="line-height: 1.5em;">French President Francois Hollande has also defended the use of those controls, saying they were&nbsp;</span><span style="line-height: 1.5em;">"applying the rules," in reference to the <a href="http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/asylum/examination-of-applicants/index_en.htm">Dublin agreement</a> which stipulates that migrants have to apply for asylum in the first European country they reach.&nbsp;</span></p>
<p><span style="line-height: 1.5em;">Other countries have also started taking measures against the rising numbers of migrants reaching Europe. On June 17, <a href="http://www.businessinsider.com/afp-hungary-to-build-border-barrier-as-eu-migrant-crisis-rages-2015-6">Hungary announced it would build a barrier on its border with Serbia</a>.<br><br><img src="http://static4.businessinsider.com/image/55919b5569bedd132094b910-1200-858/rtx1i97n.jpg" border="0" alt="Police guard migrants from Syria who have crossed the border from Serbia to Hungary, walking on the dam near the Tisza river near the city of Szeged, Hungary, on June 29, 2015.">&nbsp;</span><span style="font-size: 15px; line-height: 1.5em;">&nbsp;</span></p><p><a href="http://www.businessinsider.com/french-court-rules-against-basic-tenant-of-the-eu-2015-6#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/arctic-ground-squirrels-circadian-rhythms-2015-6">Scientists say we could learn a thing or two from these Arctic ground squirrels and their adaptability to extreme environments</a></p> http://www.businessinsider.com/heres-what-will-happen-if-greece-decides-not-to-pay-back-its-debt-2015-6Here's what will happen if Greece decides not to pay back its debthttp://www.businessinsider.com/heres-what-will-happen-if-greece-decides-not-to-pay-back-its-debt-2015-6
Sun, 28 Jun 2015 12:05:32 -0400Phillip Inman
<h2><strong>What happens on Monday when</strong> <strong>the banks open?</strong></h2>
<p>The Greek central bank has kept the main banks supplied with euro notes. Most branches that opened on Saturday were able to keep churning out notes with a few exceptions put down to administrative hiccups.</p>
<p>ATMs are also expected to be working on Monday, though it is likely that the long queues in some parts of Athens, Thessaloniki and other cities will have forced some of them to be closed.</p>
<p>Much depends on how united the government remains in the face of a backlash from Brussels, which forced the Papandreou government to abandon a similar referendum in 2011. A Northern Rock-style panic could see billions of euros withdrawn electronically by savers and businesses, as happened last week. This would force the ECB to supply further funds to the Greek central bank to cover the shortfall.</p>
<p><img src="http://static5.businessinsider.com/image/5590192269bedd34068b6716-1200-924/greek-bank-line-3.jpg" border="0" alt="Greek bank line"></p>
<h2><strong>What happens on Tuesday when</strong> <strong>the current bailout expires?</strong></h2>
<p>At this point European Central Bank president Mario Draghi and the Frankfurt-based organisation’s board will need to decide if the decision to hold a referendum warrants an extension of its support.</p>
<p>The ECB has purchased Greek bank assets at a discount to maintain a flow of funds from Frankfurt to Athens. If the ECB freezes the operation, the Greek banks would soon run out of cash, forcing the government to impose capital controls.</p>
<h2><strong>Will the ECB maintain its funding operation?</strong></h2>
<p>Unlikely. Draghi has already made it known that he wants EU politicians – not the ECB – to decide on the fate of Greece. In the meantime Draghi will keep funds flowing to Athens. However, the agreement by EU finance ministers to cut off funding from Tuesday is expected to force his hand.</p>
<p><img src="http://static5.businessinsider.com/image/5590194f6da811d156c65599-1200-924/ecb-imf-draghi-greece-talks-3.jpg" border="0" alt="ecb imf draghi greece talks"></p>
<h2><strong>What about the repayment of €1.6bn to the IMF?</strong></h2>
<p>This payment will be missed. It is made up of three separate debt payments due this month rolled up by Athens and delayed until 30 June. A further delay puts Greece in arrears, the IMF said, but not default. Creditors know that calling repayment delays a default could allow private investors, holding about €100bn of debt, to demand their money back and push the country into bankruptcy.</p>
<h2><strong>How will a referendum resolve</strong> <strong>the matter?</strong></h2>
<p>It won’t, unless voters accept the creditors’ terms. A vote to accept their demands will bring forward pension reforms (ending early retirement this week, not over a period of several years), higher VAT rates on medical supplies, catering and purchases made on Greek islands, while abandoning proposals to increase corporation tax rates.</p>
<p>Rejecting the demands will put Syriza back at the negotiating table to repeat its central demand – that expensive short-term loans with the ECB be swapped for cheaper long-term loans with the commission.</p>
<p><img src="http://static3.businessinsider.com/image/559019806da811d259c6559b-1200-924/german-angela-merkel-greek-prime-minister-alexis-tsipras-5.jpg" border="0" alt="German Angela Merkel Greek Prime Minister Alexis Tsipras"></p>
<h2><strong>Would the creditors back down should voters reject their proposals?</strong></h2>
<p>Brussels and the IMF are likely to view the verdict as a preference for life outside the euro, where rules exist to borrow from a central fund and repay according to a negotiated timetable, just as the Irish and Portuguese have done.</p>
<p>The creditors have admitted mistakes in underestimating the damaging effects of previous demands for public spending cuts as the price of bigger loans.</p>
<p>However, it is now the view of most eurozone countries that pension reforms in particular are needed to stabilise Athens’ perilous finances, especially the need to prevent 400,000 people who currently qualify for an early retirement pension being able to somehow get under the wire and claim one.</p>
<p>This article originally appeared on <a rel="canonical">guardian.co.uk</a></p>
<p>This article was written by Phillip Inman from The Guardian and was legally licensed through the NewsCred publisher network.</p><p><a href="http://www.businessinsider.com/heres-what-will-happen-if-greece-decides-not-to-pay-back-its-debt-2015-6#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="http://www.businessinsider.com/qualities-bad-leader-micromanagement-complaining-2015-6">4 things a leader should never do</a></p>